Revealed: How big banks make a killing on YOUR cash while paying no interest - 13th Apr 2011

The Big banks are using the £100 billion sitting in current accounts as a fighting fund to stifle competition from smaller rivals and prevent customers from getting the best deal.

Britain’s biggest five banks — Barclays, Lloyds Banking Group, HSBC, RBS/NatWest and Santander — pay little or no interest on the cash sitting in an estimated 47 million current accounts. And it is costing customers an estimated £2.4 billion a year in missed interest alone.

This week, a major banking report revealed that just a tiny fraction of current account customers bother to switch to a rival bank.

The Independent Commission on Banking (ICB) said the array of bank accounts on offer were so baffling that it was not easy for customers to compare whether they could get a better deal elsewhere.

Switching accounts can be so fraught with difficulties that only 7 per cent of people moved between 2008 and 2010. The report said the stranglehold of the big banks has tightened since the financial crisis, largely because of the merger of Lloyds and HBOS in 2009. Read More